Auburn Sales, Inc. v. Cypros Trading & Shipping, Inc.

OPINION AND ORDER (1) GRANTING IN PART AND DENYING IN
PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF NO.
107) AND (2) DENYING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT (ECF NO. 110) AS MOOT

LINDA
V. PARKER U.S. DISTRICT JUDGE

On
February 28, 2014, Plaintiff Auburn Sales, Inc.
(“Auburn”) filed this lawsuit against Defendants
Cypros Trading & Shipping, Inc. (“Cypros”),
Joseph Kilani, and Fadi Kilani (collectively
“Defendants”) arising out of a past business
relationship between the parties. Presently before the Court
are motions for summary judgment filed by both parties
pursuant to Federal Rule of Civil Procedure 56. (ECF Nos.
107, 110.) Finding the facts and legal arguments sufficiently
presented in the parties' briefs, the Court dispensed
with oral argument pursuant to Eastern District of Michigan
Local Rule 7.1(f). For the reasons that follow, the Court is
granting in part and denying in part Plaintiff's motion
for summary judgment, and denying Defendants' motion for
summary judgment as moot.

I.
Summary Judgment Standard

Summary
judgment pursuant to Federal Rule of Civil Procedure 56 is
appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The central inquiry is “whether the evidence
presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must
prevail as a matter of law.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251-52 (1986). After adequate
time for discovery and upon motion, Rule 56 mandates summary
judgment against a party who fails to establish the existence
of an element essential to that party's case and on which
that party bears the burden of proof at trial. Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The
movant has the initial burden of showing “the absence
of a genuine issue of material fact.” Id. at
323. Once the movant meets this burden, the “nonmoving
party must come forward with specific facts showing that
there is a genuine issue for trial.” Matsushita
Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (internal quotation marks and citation omitted).
To demonstrate a genuine issue, the nonmoving party must
present sufficient evidence upon which a jury could
reasonably find for that party; a “scintilla of
evidence” is insufficient. See Anderson, 477
U.S. at 252.

Plaintiff
is in the business of buying Chrysler parts, and reselling
the parts to Defendant Cypros. (Compl. ¶ 13.) Defendant
Joseph Kilani and his son, Defendant Fadi Kilani, are
employees of Defendant Cypros. (Id. at ¶¶
11, 12.) In early 2009, Plaintiff began having discussions
with Automotive Aftermarket Resources, LLC
(“AAR”) and Chrysler's parts subsidiary Mopar
(“Mopar”)-both nonparties to this case-in order
to obtain Chrysler parts at favorable pricing. (Id.
at ¶¶ 25-26.) In March 2010, Plaintiff, AAR, Mopar,
and Defendant Cypros cemented a distribution chain agreement
for procuring Chrysler parts for the Middle East through
Defendant Cypros. (Id.) The agreement was as
follows: “[Mopar] would provide all the parts that
Auburn could sell to AAR [;] who would then sell them to
Auburn at a markup [;] who would then sell the parts to
Cypros at a markup [.] (Id. at ¶ 27.) Mopar
delivered the goods directly to Defendant Cypros under a
“drop shipment” agreement; and consequently,
parts were never tangibly in the hands of AAR or Plaintiff.
(Id.)

Plaintiff
asserts that in 2011, Defendants obtained counterfeit parts,
and mixed and sold them with legitimate Chrysler parts they
had purchased from Plaintiff. (Id. at ¶ 31.) In
February 2013, the FBI raided Defendants' New Jersey
warehouse. (Id. at ¶ 32.) Thereafter, Defendant
Fadi Kilani was charged with trafficking in counterfeit
goods, and ultimately pled guilty to the charges in the
indictment. (Id. at ¶ 33.)

Plaintiff
asserts that when Chrysler learned of Defendants'
conduct, Chrysler instructed AAR that it could no longer sell
Chrysler parts to Plaintiff. (Id. at ¶ 38.)
Plaintiff asserts that once Defendants' wrongful actions
became publicly known, Plaintiff's “automotive
supplier customers” refused to do business with it, and
that said customers imputed Defendants' wrongful conduct
onto Plaintiff. (Id. at ¶ 40.)

Plaintiff
further asserts that as a result of the harm caused to its
reputation by Defendants' conduct, it is unable to
procure or sell any parts. (Id. at ¶ 41.)
Consequently, Plaintiff filed its lawsuit on February 28,
2014, asserting: (1) “intentional interference with
business relationship”; (2) “intentional
interference with prospective economic advantage”; (3)
breach of contract; and (4) negligence. (Id. at
¶¶ 44-76.)

On
February 3, 2015, Defendants filed a motion for summary
judgment pursuant to Federal Rule of Civil Procedure 56. (ECF
No. 40.) This Court held a hearing on May 27, 2015. In its
opinion and order issued on September 1, 2015, this Court
construed Defendants' motion as a judgment on the
pleadings and granted Defendants' motion as to the
negligence claim and denied the motion on the remaining
claims. (ECF No. 71.)

On May
16, 2016, Plaintiff filed a motion for summary judgment as to
liability on their claims and requesting that this Court
dismiss Defendants' counterclaims. (ECF No. 107.)
Defendants filed an opposition brief on June 6, 2016 and
Plaintiff filed a reply on June 20, 2016. (ECF Nos. 115,
117.) Defendants also filed a motion for summary judgment on
May 18, 2016. (ECF No. 110.) Plaintiff filed an opposition
brief on June 3, 2016 and Defendants submitted a reply on
June 16, 2016. (ECF Nos. 114, 116.)

IV.
Plaintiff's Motion for Summary Judgment

A.
Tortious Interference Claims

Plaintiff
argues that this Court should grant summary judgment as to
liability on their claims of tortious interference with a
business relationship and interference with an economic
expectancy. To prevail on a tortious interference claim, a
party must establish (1) the existence of a valid business
relationship or expectancy (enforceable contract not
required); (2) the knowledge of the relationship or
expectancy on the part of the defendant; (3) an intentional
interference by the defendant inducing or causing a breach or
termination of the relationship or expectancy, and (4)
resultant damage to the party whose relationship or
expectancy was disrupted. See Saab Auto. AB v. Gen Motors
Co., 770 F.3d 436, 440 (6th Cir. 2014) (discussing
tortious interference with economic expectancy); Wausau
Underwriters Ins. Co. v. Vulcan Dev., Inc., 323 F.3d
396, 404 (6th Cir. 2003) (discussing tortious interference
with a business relationship).

The
Sixth Circuit has found that intentional interference
“requires more than just purposeful or knowing behavior
on the part of the defendant.” Wausau Underwriters
Ins. Co., 323 F.3d at 404. “[A] plaintiff must
also allege that the interference was either (1) a per
se wrongful act or (2) a lawful act done with malice and
unjustified in law for the purpose of invading the
contractual rights or business relationship of
another.” Id.; see also Feldman v.
Green, 360 N.W.2d 881, 891 (Mich. Ct. App. 1984).
“Where the defendant's actions were motivated by
legitimate business reasons, its actions would not constitute
improper motive or interference.” Wausau
Underwriters Ins. Co., 323 F.3d at 404 (quoting BPS
Clinical Labs v. Blue Cross and Blue Shield of Mich.,
552 N.W.2d 919, 925 (Mich. Ct. App. 1996).

Plaintiff
argues that intentional interference is established by:
“(1) [Defendant] Fadi's guilty plea as to his
counterfeiting, (2) [Defendant] Joseph's admissions of
counterfeiting in the Answer, and (3) [Defendant] Fadi's
express admission of counterfeiting Chrysler labels and
buying non-Chrysler parts[.]” In their opposition
brief, Defendants argue that Plaintiff fails to demonstrate
that Defendants had the requisite intent to interfere with
Plaintiff's business. (ECF No. 115 at Pg ID 2709; see
also ECF No. 110 at Pg ID 2558.)[1] According to Defendants,
Plaintiff cannot satisfy intentional interference solely by
establishing that Defendants intentionally engaged in the act
of counterfeiting automobile parts. (ECF No. 115 at Pg ID
2709.) Defendants argue that Plaintiff fails to make a
necessary distinction between intent to counterfeit and
intent to interfere with the business relationship or
economic advantage. (Id.) In their reply brief,
Plaintiff goes further to say that intent is not a
requirement where a party has committed a wrongful act,
relying on Mino v. Clio School Dist., 661 N.W.2d 586
(Mich. Ct. App. 2003). (ECF No. 114 at Pg ID 2620.)
“Only a lawful act imposes the specific intent
finding upon which Defendants harp[.]” (Id.)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiff&#39;s
characterization of Mino is misleading. In
Mino, the Michigan Court of Appeals stated that
&ldquo;[t]o establish that a lawful act was done with malice
and without justification, the plaintiff must demonstrate,
with specificity, affirmative acts by the defendant that
corroborate the improper motive of the interference.&rdquo;
Mino, 661 N.W.2d at 596. Plaintiff is correct in
stating that Defendants actions would not constitute a lawful
act. However, the case law is clear that the
interference-whether lawful or unlawful-must have been
&ldquo;for the purpose of invading the contractual rights or
business relationship of another.&rdquo; Wausau
Underwriters Ins. Co., 323 F.3d at 404. Plaintiff has
failed to demonstrate that Defendants sold counterfeit
automobile parts for the ...

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